Cy Vance Has a $734 Million Slush Fund of Forfeiture Cash

Manhattan D.A. can spend the money seized from Wall Street banks with no governmental oversight

February 15, 2018

Cyrus Vance Jr. doesn’t have to tell you where he spends the money he collected in your name.Victor J. Blue/The New York Times

The Manhattan district attorney’s office is sitting on hundreds of millions of dollars in “off-budget” funds obtained through asset forfeiture, the majority of which fall under a state law with minimal transparency, according to a new report from the Independent Budget Office. As a result, the historic windfall is not flowing through typical budget channels, and is instead allocated at the discretion of a lone prosecutor: Cy Vance.

According to budget watchdog groups, there’s little reason that the embattled district attorney should be allowed to privately control such an enormous stream of revenue. “The Manhattan district attorney gets a lot of money from legal settlements, and is really unsupervised when it comes to where that money can be spent,” Carol Kellerman, president of the Citizens Budget Commission, tells the Voice. “When he’s suing on behalf of the state, any money that comes in as a result of those settlements should go through the state budget process.”

The IBO report, released on Wednesday, makes clear that this is far from the reality. As of last June, the Manhattan district attorney’s office held $734 million in funds garnered from criminal asset forfeiture, thanks in large part to major financial settlements reached in recent years with international banks. (This process is distinct from the more controversial civil asset forfeiture, which does not require a criminal conviction.) Of that sum, $512 million came from state settlements — including $450 million from BNP Paribas Bank, which in 2014 pled guilty to violating state law by falsifying records of New York financial institutions. But while recipients of federal forfeiture funds are required to report annually on where that money is going and how much is left over, no such statute exists under state law.

“Given the sums of money involved, and the fact that it’s effectively public money, more accountability and transparency would be warranted on the state level,” notes Doug Turetsky, chief of staff and communications director for the IBO.

Currently, the reporting required by Albany does not include end-of-year balances of accumulated assets, or any details on how much was spent or who received the funds. And the city comptroller’s annual financial report, Turetsky points out, includes these figures as an aggregate among all district attorneys, lumped in with the special accounts of several other government units. That lack of accountability has allowed Vance to accumulate an enormous nest egg of public money — nearly seven times his office’s annual operating budget — without any clear mechanism for the public to decide, or even track, how that money will be spent.

Finding an easy alternative to this arrangement doesn’t require much imagination. The New York State Department of Financial Services has also generated billions of dollars through major financial settlements, but the regulatory agency provides that money directly to the state budget. “That’s how money from the district attorney’s settlements should be handled,” according to Kellerman.

On the national level, at least, there are some restrictions on how federal forfeiture assets — money shared with local district attorneys in exchange for their cooperation with federal investigations — can be spent. By law, federal forfeiture funds given to prosecutors must go toward criminal justice expenses, broadly interpreted to include the leasing of detention facilities, new equipment, and costs associated with travel and transportation of law enforcement.

But as long as those expenses loosely relate to criminal justice, there’s little else stopping Vance from allocating money however he sees fit. In recent years, his office has transferred $20 million to the city’s police department for “communications-related fiber network enhancements” and $1.4 million to the Police Athletic League, a youth recreation organization run by the NYPD, according to the IBO report. He’s also distributed money for causes outside the city — nearly a million dollars to law enforcement agencies upstate and in New Jersey, for purposes including surveillance equipment and pistol range upgrades.

Reached for comment, Danny Frost, director of communications for Vance, told the Voice: “We are proud of the investments we are making to reform the justice system and fight 21st-century crimes, and proud of the transparency with which we are investing these dollars.” He added that “investments” made by the Manhattan district attorney’s office were registered with the New York City Department of Finance, and encouraged New Yorkers to learn about the D.A.’sCriminal Justice Investment Initiative.

Established by Vance in 2016, that initiative brings about $250 million in forfeiture assets to “impactful projects,” ranging from increased services for victims of hate crimes to educational programs in prisons. To accompany each of these investments, the district attorney’s office sends out an individualpressrelease, full of private testimonies thanking Vance for his contribution. Reading them, it’s easy to forget that the money comes not from a generous philanthropist, but from a collection of funds meant for the public.

And whether or not that money is going toward worthy causes, the mere fact that Vance has influence over such a large sum of it affords him a power that far exceeds the typical authority of the office. For those concerned with responsible governance, that’s a red flag — a “separation of powers issue,” as Kellerman calls it — regardless of the district attorney’s stated intentions.

“People voted for a district attorney to prosecute cases, not make spending decisions,” says Kellerman. “Vance winds up performing a function that’s not in his job description, when really that money should go to the people.”

UPDATE: After this story was published, a spokesperson for the Manhattan district attorney reached out to the Voice to note that Vance has returned $2.04 billion to the state treasury and $1.4 billion to the city since taking office. The spokesperson also clarified that money given to law enforcement agencies for pistol range upgrades was actually distributed by the DEA’s High Intensity Drug Trafficking Areas (HIDTA) program, which uses the district attorney’s office as a “fiduciary conduit.”

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